How does shared equity compare with other asset building strategies available to lower income households?

Buying a home has the ability to generate wealth for the homeowner through appreciation and tax deductions. However, buying a home comes with costs. Through shared equity homeownership, the initial amount of the home is reduced. Therefore, the monthly payments are reduced, creating affordability in an otherwise unaffordable market. When some low income families pursue market rate housing, they may be spending more than 30 percent of their income on their home. Some may be spending more than 50 percent. This rate of spending equals less money available for food, healthcare and long term investments like college tuition. Studies show that low income families spending more on their homes have a greater possibility of foreclosure. While shared equity homeownership means a lower share of appreciation, through stable monthly payments families are saving money, taking advantage of the federal benefits of homeownership and still have the probability of taking equity with them upon resale as do traditional homeowners.  Of course, families may not generate as much wealth as they might have if they had purchased a market-rate home. For low income families, however, the reality is that they may never have the opportunity to afford market rate homes. And like many other families, low income families may only gain wealth from their homes if they remain in the home for many years.

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